DW Aina Le'a Development, LLC v. Bridge Aina Le'a, LLC.

339 P.3d 685, 134 Haw. 187
CourtHawaii Supreme Court
DecidedNovember 25, 2014
DocketSCAP-13-0000091
StatusPublished
Cited by17 cases

This text of 339 P.3d 685 (DW Aina Le'a Development, LLC v. Bridge Aina Le'a, LLC.) is published on Counsel Stack Legal Research, covering Hawaii Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DW Aina Le'a Development, LLC v. Bridge Aina Le'a, LLC., 339 P.3d 685, 134 Haw. 187 (haw 2014).

Opinion

Opinion of the Court By

RECKTENWALD, C.J.

This appeal turns on whether the Land Use Commission (the LUC) properly reverted land to its former land use classification pursuant to Hawaii Revised Statutes § 205-4(g) (2001 & Supp. 2007). We hold that the LUC erred in reverting the land without complying with the requirements of HRS § 205-4 because the land owners had substantially commenced use of the land in accordance with the representations they had made to the Commission.

The instant dispute concerns the classification of land in Waikoloa on Hawaii Island. In 1989, the land was reclassified from agricultural to urban, in order to allow for the development of a residential community. The reclassification was made subject to numerous conditions, including a condition that at least sixty percent of the residential units be affordable. Over time, the land changed hands several times and the LUC granted requests to amend the affordable housing condition.

By 2005, the condition required the landowner, Bridge Ana Le‘a, LLC (Bridge), to construct no fewer than 385 affordable units, i.e., twenty percent of the total units to be constructed. It further required Bridge to provide certificates of occupancy for all of these units within five years, and submit a joint venture agreement and mass grading contract within a year.

In December 2008, the LUC issued an order to show cause (OSC) why the land should not revert to its former agricultural land use classification. The LUC stated that it had reason to believe that Bridge and its predecessors in interest had “failed to perform according to the conditions imposed and to the representations and commitments made to [the LUC] in obtaining reclassification of the Subject Aea and in obtaining amendments to conditions of reclassification.” Soon thereafter, Bridge informed the LUC that it intended to assign its interest in the land to DW Ana Le‘a Development, LLC (DW) through an installment sale. DW subsequently invested more than $20 million in developing the site. Nevertheless, after proceedings over the course of several years, the *191 LUC issued an order reverting the land to the agricultural use district. Bridge and DW each sought judicial review of the LUC’s decision and order, and their cases were consolidated in the circuit court.

The circuit court reversed and vacated the LUC’s decision and order. The circuit court concluded that the LUC: (1) exceeded its statutory authority and violated HRS chapter 205; (2) violated HRS §§ 205-4(h), 205-17, and 205—4(g); (3) violated HRS chapters 91 and 205 and Hawai'i Administrative Rules (HAR) chapter 15; and (4) violated Bridge’s and DW’s due process and equal protection rights.

On appeal, the LUC raises three arguments. First, the LUC argues that HRS § 205-4(g) expressly authorizes it to issue an OSC why reclassified land should' not revert to its former land use classification. Second, the LUC argues that the circuit court erred in denying its motion to strike certain documents from other LUC eases, which had been included in the record on appeal. Third, the LUC argues that the circuit court erred in considering Bridge’s and DWs constitutional arguments, and that those arguments were unfounded.

We hold that the LUC erred in reverting the property without complying with the requirements of HRS § 205-4 that are generally applicable when land use boundaries are changed. See infra at 714. Once the LUC issues an OSC, the procedures it must follow before reverting land depend upon whether the petitioner has substantially commenced use of the land. Once use of the land has substantially commenced, the LUC is bound by the requirements of HRS § 205-4. Here, by the time the LUC reverted the property to the agricultural land use district, Bridge and DW had substantially commenced use of the land in accordance with their representations. Specifically, they had constructed sixteen townhouses on the property, commenced construction of numerous other townhouses, and graded the site for additional townhouses and roads. At that point, more than $20 million had been spent on the project. Although Bridge and DW had substantially commenced use of the land, the LUC failed to comply with the requirements of HRS § 205-4. The circuit court therefore correctly concluded that the LUC erred in reverting the property.

The circuit court erred, however, in denying the LUC’s motion to strike. The disputed documents are portions of dockets from other cases in the LUC. Because these documents were not part of the administrative record, and neither Bridge nor DW sought to supplement the record in the circuit court, these documents should not have been included in the record on appeal.

The circuit court also erred in concluding that Bridge’s and DWs procedural and substantive due process rights and equal protection rights were violated. With respect to procedural due process, both Bridge and DW had notice of the OSC and that the LUC might revert the property. They also each had a meaningful opportunity to be heard on the proposed reversion. With regard to substantive due process, the LUC’s reversion was not “clearly arbitrary and unreasonable,” given the project’s long history, the various representations made to the LUC, and the petitioners’ failure to meet deadlines. With respect to Bridge’s and DWs equal protection arguments, the record does not establish that the LUC’s imposition of a condition and subsequent reversion of the property constituted a violation of the petitioners’ equal protection rights.

We therefore affirm the circuit court’s second amended judgment in part because the LUC failed to comply with the requirements of HRS § 205-4. We vacate the second amended judgment to the extent it is based on the circuit court’s conclusion that the LUC violated Bridge’s and DW’s constitutional rights.

I. Background

The following factual background is taken from the record on appeal.

A. Land Use Commission proceedings

This appeal arises out of a dispute over the classification of approximately 1,060 acres of land in Waikoloa. In 1989, the LUC granted a petition to reclassify the land from the agricultural to the urban land use district to *192 allow for the development of a residential community. The original proposal, submitted by Signal Puako Corporation (Signal), included approximately 2,760 residential units. Signal offered to provide thirty percent of the units at prices which families with an income range of 80-120% of the County of Hawaii’s median income could afford.

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Cite This Page — Counsel Stack

Bluebook (online)
339 P.3d 685, 134 Haw. 187, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dw-aina-lea-development-llc-v-bridge-aina-lea-llc-haw-2014.